Let’s put the politics back in political economy

18 02 2009

I have argued in the last part of my white paper The UK Economy After the Recession that this recession represents the spread of a political crisis into the economy.

The great thinkers of the 18th and 19th Centuries understood that economics and politics were intertwined,and that you could not understand one without the other. That is why they preferred the term political economy to describe economic activity. This was as true of proponents of the market such as Adam Smith as it was of its critics,like Karl Marx.

These days economics is analysed as a  technical process, divorced from the political and sociological aspects of society. It appears mystified and incomprehensible to the majority of people . Yet we should always remind ourselves that economics is the sum total of what we do to make a living. It is human activity and therefore, like politics,susceptible at least in theory to conscious change.

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2 responses

23 02 2009
charliemcmenamin

Given that it is the unregulated risk taking actions of the banks and hedge funds – which are often closely interlinked (http://www.lrb.co.uk/v30/n23/mack01_.html) – that have been at the eye of the storm of this crisis, it is hard to agree with you that less regulation is required.

But I do accept that regulation as a ‘box ticking’/ risk minimisation exercise is not what is wanted: we need regulation which changes the calculation of where risks should be taken. Regulation should encourage investment risk in enterprises likely to fulfill long term social goals. So regulation should encourage investment in emerging technologies, especially in the biotech and green energy & transport spheres, rather than financial speculation or housing.

23 02 2009
CharlieMcmenamin

Whoops- 2 mistakes in that comment I see. There should have been a after the word ‘where’ to stop the italics.

&, even more embarrassingly, the whole comment should have been posted two entries up against the original post it responses to…

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